Cleveland Area Mortgage Lenders Are Perpetuating Redlining With Current Lending Patterns, According to Study

A report published this month by the local Fair Housing Center for Rights & Research examined mortgage lending data from the 10 largest lenders in Cuyahoga County between 2012-2016.

The mortgages from these 10 companies account for more than half of all home loans originated during that time frame, and what they demonstrate, say the study's authors, is that the local lending industry is perpetuating America's historically racist housing policies.

"Mortgage lenders are not making loans in majority-black neighborhoods," said Michael Lepley, the Fair Housing Center's Senior Research Associate and the study's co-author. "They aren’t advertising in majority-black neighborhoods. They don’t locate their branches in majority-black neighborhoods. They aren’t creating products that work in majority-black neighborhoods. And when people try to borrow money to buy a house in a majority-black neighborhood, they’re twice as likely to be denied by all the lenders we looked at."

Broadly speaking, Lepley said that Cuyahoga County lending patterns of today are "strikingly similar" to the region's redlining maps of the 1940s and 1950s. Those maps, officially called "residential security maps" were created by the Home Owner's Loan Corporation (HOLC) and shaded red those areas with (or near) African-American populations, excluding them from the loan program.

The Fair Housing Center report noted that modern lending practices like credit scores and minimum loan amounts, which appear to be racially neutral, are often discriminatory in their effects. And in Cuyahoga County, the shift to online banking has been particularly harmful for minority communities.

Between 2016 and 2017, Cuyahoga County lost 22 bank branches (fourth most in the country) as lenders have increasingly shifted their business online. But in the City of Cleveland, less than 40 percent of households have internet access in most majority-minority neighborhoods. In some of those census tracts, less than 20 percent have internet access.

The numbers, though, largely speak for themselves. The following home loan origination data are from 2012-2016. (A PDF of the full report is available below.)